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The European Union will reject any future free trade agreement with Britain if it slashes EU regulation and red tape after Brexit, Michel Barnier said today as Peter Mandelson warned against turning the UK into a "satellite of the USA".

The EU’s chief Brexit negotiator said any British efforts to lure investment away from the bloc by undercutting European regulation on tax, environment, food safety and other issues would force it to scupper any trade deal.

Despite British assurances that the UK will continue to observe high standards after the split, Brussels fears Brexit will be used to turn Britain into a low-regulation tax haven in a “race to the bottom”.